Today's Headlines

Bloomberg:

• Cosco Shipping Loss Triples in Latest Sign of Weak China Profits. Cosco Shipping Co. (600428), a listed unit of China’s biggest shipping group, said first-half net loss tripled, the latest sign that slowing growth in the world’s second-biggest economy is eroding corporate earnings. The shipping company’s loss in the first six months was 78 million yuan ($12.7 million), widening from 23.6 million yuan a year earlier, it said in a statement to Shanghai’s stock exchange yesterday. Gold miner Zijing Mining Group Co. (2899), sportswear maker Peak Sport Products Ltd. (1968) and winemaker Dynasty Fine Wines Group Ltd. (828) are among others to report sliding profits or losses this month.

• Ibovespa Rout to Worsen as EPS Estimates Sink: Corporate Brazil. Brazilian earnings estimates are falling faster than the Ibovespa benchmark gauge, signaling to HSBC Holdings Plc and Citigroup Inc. that the world's worst major stock market selloff isn't over. Analysts have cut the average earnings-per-share forecast on companies in the Ibovespa, led by retailer B2W Cia. Digital, by 33% over the past 12 months, outpacing the index's 15% plunge. That has lifted stock valuations, with the gauge trading at 11.2 times earnings estimates, up from 9.3 times a year ago, according to Bloomberg.

• Indonesia Fights Inflation With More-Than-Forecast Rate Rise. Bank Indonesia raised its key interest rate more than economists forecast to bolster a weakening currency and ease inflation pressures after the government increased fuel prices last month. The central bank boosted the reference rate by 50 basis points to 6.5 percent, Governor Agus Martowardojo said in Jakarta today. The outcome was predicted by three of 19 economists surveyed by Bloomberg News, with the majority expecting a 25 basis-point increase. It also raised the deposit facility rate to 4.75 percent from 4.25 percent.

• Rajoy Punishes Exporters Sustaining Spain’s Economy: Euro Credit. Aliberico SL survived Spain’s economic crisis by expanding sales of aluminum panels in the U.S., Brazil and Morocco. Prime Minister Mariano Rajoy’s plan to raise corporate taxes may undermine the company’s efforts. “The fiscal pressure is intense,” Clemente Gonzalez Soler, chief executive officer and founder of the Madrid-based manufacturer, said in a telephone interview. “The changes mean a loss of competitiveness for Spanish companies just at the moment when we need to export more.”

• Deutsche Bank(DB) Opaque Loans From Brazil to Italy Obscure Risk. Deutsche Bank AG (DBK), perennially among the top three in global credit markets, made billions of dollars of loans to banks worldwide since 2008 and accounted for them in a way that obscured their continuing risk to investors. Germany’s largest bank managed to lend to firms from Brazil to Italy while making the transactions disappear from its balance sheet, even though it still is owed the money, according to four people with knowledge of the practice and internal documents provided to Bloomberg News. Deals totaling 2.5 billion euros ($3.3 billion) involving Italy’s Banca Monte dei Paschi di Siena SpA and Banco do Brasil SA reveal a technique that obscured Deutsche Bank’s lending reach when it sent cash to the banks, the documents show. The company had talks about a similar loan to Dexia SA (DEXB) weeks before that firm was rescued, according to the documents, and it used the same accounting for other deals through 2011, two of the people with knowledge of the transactions said. “We should be very concerned about the opacity and complexity of these transactions,” said Joshua Rosner, an analyst at research firm Graham Fisher & Co. in New York who warned in early 2007 that securities linked to subprime loans posed risks to the economy. 

• European Stocks Gain Amid Continued Fed Stimulus Optimism. European stocks advanced to their highest level in more than five weeks after Federal Reserve Chairman Ben S. Bernanke said the U.S. economy will continue to need stimulus measures. Ashmore Group Plc (ASHM) jumped 7.1 percent after reporting fiscal fourth-quarter net inflows of $4.5 billion. BHP Billiton Ltd. and Rio Tinto Group, the world’s biggest mining companies, each gained 4.6 percent. Portuguese shares slid amid uncertainty over whether the country’s president will approve the new make-up of the government. The Stoxx 600 increased 0.6 percent to 296.54 at the close of trading.

• Treasury 10-Year Notes in Longest Rally Since February on Fed. Treasury 10-year notes rose for a fourth day, the longest rally since February, after Federal Reserve Chairman Ben S. Bernanke called for maintaining stimulus amid division among policy makers on when to slow bond buying. Treasury notes remained higher after the U.S. sold $13 billion in 30-year bonds at the highest yield in almost two years. Benchmark 10-year yields approached the biggest weekly drop in more than a year after Bernanke said yesterday “highly accommodative monetary policy” was needed for the foreseeable future to support the economy. The yield climbed to the highest level since August 2011 earlier this week on speculation the Fed will scale back purchases. “You had more evidence from the Fed that they are going to great lengths to make the market realize that they are very data dependent and are not talking about tightening,” said David Coard, head of fixed-income trading in New York at Williams Capital Group LP, a brokerage for institutional investors. The Fed “won’t do anything that will jeopardize a recovery that’s still somewhat fragile.”

• Gold Rises to Two-Week High as Bernanke Backs Sustained Stimulus. Gold futures rallied to a two-week high after Federal Reserve Chairman Ben S. Bernanke said yesterday that the U.S. needs “highly accommodative monetary policy for the foreseeable future.” Silver also gained. Gold futures for August delivery climbed 2.6 percent to settle at $1,279.90 an ounce at 1:46 p.m. on the Comex in New York, the biggest jump for a most-active contract since July 1. Earlier, the precious metal touched $1,297.20, the highest since June 24, the last time the price topped $1,300.

• IEA Sees 20-Year Supply Peak Outpacing Demand in 2014. Oil supply will outstrip an acceleration in demand growth next year as production outside of OPEC expands at the fastest pace in 20 years, the International Energy Agency predicted. World oil consumption will climb by 1.2 million barrels a day next year, up from 930,000 a day in 2013, the IEA said in its first monthly report with forecasts for 2014. Supplies from outside the Organization of Petroleum Exporting Countries will jump by 1.3 million barrels a day amid booming output in North America, shrinking the need for crude from the 12-member producer group, according to the report. The assessment should “give bulls some cause for alarm,” the Paris-based adviser to oil-consuming nations said. “While demand growth is also forecast to pick up momentum,” this “will still fall short of forecast non-OPEC supply growth.” 

• U.S. Mortgage Rates for 30-Year Loans Rise to 2-Year High. U.S. mortgage rates for 30-year loans rose to a two-year high, increasing borrowing costs amid signs of an improving job market. The average rate for a 30-year fixed mortgage climbed to 4.51 percent, the highest since July 2011, from 4.29 percent last week, McLean, Virginia-based Freddie Mac said in a statement today. The average 15-year rate increased to 3.53 percent from 3.39 percent.

• Fed’s Duke to Resign Aug. 31 After Five Years as Governor. Federal Reserve Governor Elizabeth Duke, a former community banker who focused on regulation, plans to resign her seat effective Aug. 31. Duke, who never dissented from a Federal Open Market Committee decision, submitted her letter of resignation to President Barack Obama and made no announcement about her future plans, the Fed said in a statement today in Washington.

MarketWatch:

• Bring back Glass-Steagall with modern twist, say senators.

• What to watch in J.P. Morgan(JPM), Wells Fargo(WFC) earnings. Capital markets, rates should help bank earnings this quarter.

Zero Hedge:

• Complete 2013 Year To Date Hedge Fund Performance. (table)

• Portuguese President Re-Ignites "Time-Bomb"; Threatens Early Elections.

• Initial Claims Spike To 360K: Highest In Two Months. (graphs)

• Third Largest Futures Broker Gets Record Fine For HFT Stock Market Manipulation.

• European Bonds And Stocks Slide From Bernanke Opening Exuberance. (graphs)

• What Every Student in America Needs To Know About The Federal Reserve. (graphs)

Business Insider: 

• CARSON BLOCK: We Don't Realize How Deep We're Stuck In Tanking Emerging Markets.

• We're In For A Long Fight Over The Debt Ceiling Before There's A Resolution On Immigration.

Reuters: 

• Chinese banks lend aggressively in early July, risking another crackdown. New local currency yuan loans extended by China's big four state-owned banks stood at an unusually large 170 billion yuan ($27.7 billion) in the first week of July, the official Shanghai Securities News said on Thursday, a move that may alarm regulators trying to strangle distorted credit growth. Traders said similarly aggressive lending by Chinese banks in early June caused the central bank to set off an acute liquidity squeeze in the country's interbank market.

• Lacklustre Italian auction weakens peripheral bonds. Italian bond yields rose on Thursday after a lacklustre debt auction that suggested choppy trading caused by the Federal Reserve's mixed messages on ending stimulus is hurting demand for lower-rated euro zone debt. 

• TABLE-US May ICSC retail sales rose 3.9 pct vs year ago.

• METALS-Copper climbs 3 pct to near one-month high on Fed signals. Three-month copper on the London Metal Exchange rose more than three percent to its highest since June 18 at $7,049.25 a tonne in intraday trade. It then closed at $7,000, from a last bid of $6,825 on Wednesday. 

• Dollar losses accelerate versus yen and euro. The U.S. dollar's losses versus the yen and euro accelerated in mid-morning New York trade on Thursday as investors continued to shed bullish dollar bets on the greenback in the wake of comments made by Federal Reserve Chairman Ben Bernanke.

Telegraph:

• A modest rise in interest rates could cause a million households to 'collapse'. New analysis shows alarming numbers of debt-laden households vulnerable to minor rate rises - even in a positive scenario of rising incomes.

O Estado de S. Paulo:

Restructuring: Flowers slams Europe over inaction


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• Brazil Considers Postponing New Tax Cuts. Some tax cuts already announced for next yr may be delayed on need for further fiscal tightening, citing people in the govt's economic team.

Echoing fears that European policymakers remain in a state of cognitive dissonance – recognizing the need for root-and-branch overhaul of peripheral banks, but backtracking on joint liability plans – Christopher Flowers, the legendary FIG investor who now runs the £2.3 billion ($3.5 billion) private equity group JC Flowers, sounded the alarm over the negative sovereign-bank feedback loop. In a shot across the bows of market bulls, who cite the return of capital flows to weaker eurozone states, Flowers issued a stark warning: "There is a scenario where we have a Lehman-type event: we wake up some Thursday and a big country is in trouble. "And the ECB will have to decide to support banks x, y, z. And then the ECB will, in fact, decide to own bank x, y, z.


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China News Service:

• China 2H Trade Situation May Be More Serious. Rising costs caused by yuan appreciation and higher labor costs are "important factors" that make trade environment more serious, citing Commerce Ministry spokesman Yao Jian today in Beijing.